Corporate Strategy: Red Bull's Multi-Club Ownership Model in the Football Industry

Abstract

The main purpose of this thesis is to give the reader an understanding of how corporate strategy theory can help understand Red Bull’s multi-ownership model in the football industry. This is done through an analysis that by use of relevant theories describes Red Bull’s internal capabilities and their chosen strategies towards sporting and commercial success. Furthermore, an external analysis will explain the chosen industry of football and compare the company to its main competitor within multi-club ownerships. A presentation of Red Bull’s multi-ownership and the markets in which they are presented describes and visualizes how Red Bull’s multi-ownership is structured globally and gains profit in the four respective markets they have entered. Barney’s VRIO model is used to emphasize the importance of having strong internal resources and capabilities and show that Red Bull contains a strong management and financial resources. Furthermore, diversification strategies and portfolio strategies uncover Red Bull’s strategy of acquiring competitors and create a large portfolio of clubs which can be categorized as a multi-club ownership that benefits from realizing synergies from each other. These investments towards a multi-club ownership are done with a commercial purpose of creating brand awareness and evoke emotions towards the Red Bull brand by creating memorable sport experiences which is contributing to the fact that Red Bull as of today has the highest brand value in the energy drink industry. Furthermore, Porter’s five forces and a comparative analysis shows that Red Bull has diversified into an industry with low profitability and high competition among the competitors. The main competitor within multi-club ownerships is City Football group, which also can be argued to have diversified into football with a commercial purpose. Both the internal and external analysis are backed up by three semi-structured expert interviews with experts that each have knowledge on their subject areas within Red Bull’s multi-club ownership, the markets they diversified into, and the global football industry. Based on this analytical framework, this thesis contains an understanding of how corporate strategy has supported Red Bull’s multi-ownership model in becoming successful both sportingly and commercially.